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Factsheet #124

July 30, 2013

What Happens During a Government Shutdown?

A Slowdown, Not a Shutdown

  • What Causes a Shutdown? A government shutdown occurs when funding measures for the day-to-day operations of the federal government expire and Congress and the President do not agree on new spending levels by enacting appropriations bills or a continuing resolution in time. During such a funding gap, all non-emergency (or “non-excepted”) federal government activities cease until Congress passes, and the President signs, new spending legislation into law.
  • What Might Cause This “Shutdown”? The House of Representatives is writing spending bills that would restrain the growth of federal spending, as agreed to in the 2011 Budget Control Act, while reprogramming some of the required cuts to provide adequate funding for national defense needs. But the Senate is writing its appropriations bills to spend $91 billion more in 2014, as if sequestration—part two of the Budget Control Act—had been repealed. Meanwhile, President Obama has issued several veto threats on bills with spending levels he disagrees with. Funding for Obamacare is a further point of contention.
  • Not Unusual: A government shutdown is neither catastrophic nor unusual, especially when a divided government wrestles over issues of spending, taxation, deficits, and debt. Six shutdowns occurred between 1977 and 1980, and 11 more shutdowns occurred through 1996.
  • Vital Services Keep Running: The term shutdown substantially overstates the matter. The most essential services continue, such as: (1) providing for national security, (2) conducting foreign affairs, (3) providing for the continuity of mandatory benefit payments, and (4) protecting life and property. These services include military, law enforcement, veterans care, and others. Social Security checks are still mailed and self-funded agencies like the Postal Service would continue operating.
  • How Many Workers Would Be Affected? According to Administration officials about the same number of federal government workers would be affected as during the 1995 shutdown when about 800,000 workers were initially furloughed.
  • Plans Are in Place: Federal agencies develop contingency plans in preparation for potential “shutdowns” and continually review their operations during a shutdown for situations in which some category of service may become essential to protect life and property.
  • Does Not Save Money: A shutdown is not a cost-saving measure. Back wages are typically paid even for furloughed employees.
  • 1995–1996: During the last shutdowns, visa and passport applications, and bankruptcy cases were affected; 368 national parks closed. But the Department of Defense, power grid maintenance, the Border Patrol, the Coast Guard, air traffic controllers, inpatient and emergency outpatient medical care, and other vital services continued.

A “Shutdown” Can Be Avoided

  • Spending Cuts: The current debate is over whether Congress upholds its legal commitment to reduce discretionary federal spending by 2.5 percent ($91 billion out of $3.6 trillion) while providing needed funds to national defense. It is also about not providing more funding to Obamacare to avoid further damage from the ill-devised health care law.
  • What’s at Stake: A shutdown would temporarily impair a number of government activities, but essential functions involving the safety of human life or the protection of property would still be provided. Large deficit spending, growing debt, and the burden of Obamacare, however, would harm the economy and Americans’ opportunities and income permanently.

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